Foreign Debt Rating of Colombia Increased

The foreign debt rating of Colombia was raised to the 2nd lowest investment grade by the Standard & Poor’s as the country’s economic growth has increased the overall tax revenues and the peace talks with the rebels increased the confidence in the investors. The yields on the benchmark local bonds went down to a record low figure as the S&P lifted Columbia one step to BBB as it feels that the outlook is stable. The current rating of Columbia is in line with other countries such as Peru, Mexico and Brazil. On the other hand, the major currency of this Latin American country, Columbian Peso jumped up by 0.1% and is currently priced at 1,836.60 per USD.

According to the Credit Analyst of S&P, Joydeep Mukherji, the creditworthiness of Columbia has increased, mainly because of factors such as: strong fiscal profile, growing domestic capital markets & favorable long term prospects for the GDP growth. Mukherji added that the current negotiations between the main guerrilla group of Columbia and the Government is expected to lead to a significant reduction in the violence.

For the first time in a decade, in 2011, Columbia was given an investment grade credit rating. The improved security in the country bolstered economic growth and attracted record amount of foreign investment as well. On the very same year, the Congress passed a legislation which is known as fiscal rule. This allowed the country to save part of windfalls which resulted from the increasing commodity prices.

Incidentally, the representatives of the Columbian Government are currently in talks with the guerillas of the Revolutionary Armed Forces of Columbia, which is the biggest rebel group of the country. They are trying to put an end to the conflict that has been in existence for the last 5 decades. On 8th April, the President of the country, Juan Manuel Santos stated that the opportunity to end the conflict is getting closer; however, there is still a long way to go.

The Finance Minister of Columbia, Mauricio Cardenas believes that the rating upgrade is a positive factor for the country. This is probably the best possible news for the country in the current year, as stated by Cardenas and he added that the rating upgrade will call for lower borrowing costs in Columbia. Yield on benchmark Columbian Peso declined by 4 basis points to 4.84%.